March 21, 2017 / 4:38 AM / 9 months ago

JGBs edge higher on BOJ buying, stronger Treasuries

TOKYO, March 21 (Reuters) - Japanese government bond prices edged higher on Tuesday, lifted by a regular debt-purchasing operation by the Bank of Japan and overnight gains by U.S. Treasuries.

The benchmark 10-year yield and the 30-year yield were both half a basis point lower at 0.065 percent and 0.830 percent, respectively.

June 10-year futures added 0.13 point to 150.26.

The BOJ on Tuesday bought a total of 1.15 trillion yen ($10.2 billion) of JGBs ranging from the short-end to the super-long maturities as part of its regular debt-buying scheme.

In a move that could reduce risk for bond brokers, Japan’s Ministry of Finance is considering shortening the period between the auction and the issuance of some JGBs, sources with knowledge of the matter said.

JGB brokers have long wanted such a step because the BOJ, by far the largest buyer of JGBs because of its massive bond purchase scheme, does not accept the bonds that have been auctioned but are yet to be issued, compelling brokers to hold a large number of bonds over the interim period.

“It has been the case that some new JGBs, like the 10-year maturities, auctioned at the end of each quarter, were not eligible to be sold at the BOJ’s ‘rinban’ outright buying operations,” said Takafumi Yamawaki, chief bond strategist at JP Morgan Securities in Tokyo.

“The change, if realised, would help reduce risk for the bond holder.”

A large amount of JGBs reached maturity on Tuesday, and the market was also supported by investors reinvesting their funds back into government debt.

Treasuries gained on Monday as Chicago Federal Reserve President Charles Evans reiterated the U.S. central bank’s view that two more interest rate hikes this year are likely, disappointing investors who had anticipated a faster path of rate increases.

$1 = 112.7300 yen Reporting by the Tokyo markets team; Editing by Sherry Jacob-Phillips

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